Slash number of bank fees and regulate some, says parliamentary inquiry
Recommends reform of household accounts, comparable lists of services to increase competition between banks
The parliamentary inquiry into bank service fees recommends that the Bank of Israel create a benchmark for households to measure the fees that the banks charge. It also recommends that the Bank of Israel order the banks to reduce the number of fees they charge for retail banking services to households and small businesses, and private banking.
The Supervisor of Banks at the Bank of Israel will publish the benchmark on a quarterly basis, the panel recommended on Tuesday morning. Its purpose is to intensify competition between the banks over the household sector, and help customers reach informed decisions about their banking needs.
The findings presented to the committee about the height of fees and the absence of competition indicate an absence of transparency to customers, mainly because of the sheer number of fees and the absence of focused supervision by a professional agency, the panel said. Having fewer fees would improve transparency, and abolish the practice of having several types of fees apply to a single banking service.
It suggests that certain fees be subject to regulation, and also feels that the Bank of Israel should be the one to regulate prices, not the Ministry of Industry and Trade.
The panel recommends setting a uniform list of bank services that would apply to all banks, which would use the same names for fees.
The Bank of Israel should also consider banning fees on exchange rate-related transactions such as deposits, loans and currency conversions, such that the interest that the bank charges, or the exchange rate differences, would include service charges. That way the client can receive a single price for a single transaction and easily compare it with the prices offered by other banks.
The panel adopted a Bank of Israel recommendation to create several models for checking accounts: basic, expanded, and Direct. The banks would charge a single monthly management fee. The fee for the basic package of service, which includes a limited number of transactions each month, would be supervised.
Another Bank of Israel idea that found applause was to institute mechanisms to facilitate moving accounts between banks. The panel recommends a campaign to create public awareness, to take steps to assure enforcement and to create yardsticks for measuring client mobility.
The panel also suggests that banks be required to issue full quarterly statements to customers based on criteria to be set by the Bank of Israel. That too could facilitate transfer from one bank to another, it says.
The Postal Bank should be converted into a proper bank, and the banks should be forced to sever ownership relations with credit card companies, the panel says.